RFS instability hurts investment in advanced biofuels

Biotechnology Innovation Organization (BIO) contends that the EPA’s new methodology for setting annual Renewable Fuel Standards continues to chill investment in advanced biofuels. BIO says it found in a new analysis released this week that investment patterns clearly demonstrate that EPA is sending a sustained market signal that disincentivizes advanced biofuels, causing a $22.4 billion shortfall in necessary investment.

Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section, says, “EPA recognizes that its delays in rulemaking from 2013 to 2015 undercut investment in advanced biofuels. The agency fails to recognize, however, that its methodology – including in the newly proposed 2017 rule – also undercuts investment in advanced biofuels. Data on investment in the biofuel sector bears out that EPA’s methodology has forced producers to consolidate investment in conventional biofuel production capacity and distribution infrastructure, while sacrificing investment in advanced biofuels.

“Following yet another year of policy instability, BIO now estimates that EPA’s rulemaking delays, unwarranted expansion of its waiver authorities, and methodology for setting annual RVOs has caused a $22.4 billion shortfall in investment in advanced biofuels. EPA is sending a sustained market signal that disincentivizes and discourages advanced biofuel producers, who have reached a stage where investment in proven technologies and processes could rapidly expand availability of cleaner, low-carbon transportation fuels.

“EPA can correct course in the 2017 rule by reversing its use of the general waiver authority to reduce overall volumes, raising advanced biofuel volumes sufficiently to obviate competition among biofuel developers, and ensuring that the U.S. transportation fuel market is open to every gallon of renewable fuel that can be produced.”